New York (AFP) – Boeing on Wednesday named the aerospace veteran Robert “Kelly” Ortberg its next CEO, as the aviation giant reported a hefty loss on continued operational problems. Ortberg, 64, helped lead aviation communications and electronics supplier Rockwell Collins and integrate it into United Technologies, which then merged with Raytheon to become RTX. He retired from RTX in 2021. He is an engineer seasoned in aerospace and an outsider to Boeing, fulfilling key CEO requirements in the eyes of some aviation insiders.
His appointment, which will take effect on August 8, comes as Boeing attempts to rebound from a series of safety and quality control problems that have sharpened scrutiny of the company. Those difficulties were immediately visible in Boeing’s second-quarter results released Wednesday showing a loss of $1.4 billion, compared with a loss of $149 million in the year-ago period. The quarterly results reflected a continued drag from Boeing’s commercial division, where it has lowered production while upgrading safety and quality control practices under the close watch of regulators. The company also experienced deep losses on several defense contracts due to supply chain problems, as well as higher engineering costs and technical issues.
– Leadership shake-up – Boeing has been in the hot seat since a January incident in which a 737 MAX operated by Alaska Airlines made an emergency landing after a fuselage panel blew out mid-flight. That incident raised fresh scrutiny of Boeing and the MAX, following two fatal crashes in 2018 and 2019 that led to a lengthy grounding of the plane. Outgoing leader Dave Calhoun unexpectedly ascended to CEO in January 2020 after the ouster of his predecessor Dennis Muilenburg amid fallout from the MAX crashes.
Calhoun had appeared poised to stay on as CEO to 2028 until the Alaska Airlines incident sparked outrage on Capitol Hill and concern among Boeing’s airline customers. Calhoun announced on March 25 that he would step down by the end of this year. Pointing to the need for a major turnaround, aviation experts had hoped the next Boeing CEO would ideally have an aerospace background, experience managing big manufacturing projects, strategic smarts, a hands-on approach to safety, and the ability to navigate congressional hearings.
In Wednesday’s statement, Boeing Chairman Steve Mollenkopf described Ortberg as “an experienced leader who is deeply respected in the aerospace industry.” Ortberg said he was “extremely honored and humbled to join this iconic company,” adding: “There is much work to be done, and I’m looking forward to getting started.” Some analysts have suggested that Boeing’s next CEO could remake the company’s executive ranks. But Calhoun indicated he does not expect significant personnel changes, saying, “I don’t think this is intended to be a large leadership overhaul.” Ortberg “knows full well that we’re in a recovery mode,” said Calhoun, adding that he was not deeply involved in the CEO selection process.
– ‘Very challenging job’ – Immediate priorities facing Ortberg include negotiations with a Seattle-area Boeing union amid threats of a potential September strike, and restoring production levels on the MAX and 787 Dreamliner to meet Boeing’s targets by late 2024. The union, the International Association of Machinists and Aerospace Workers District 751, greeted Ortberg’s appointment as “a prime opportunity for Boeing to prove its dedication to its workforce,” said IAM District President Jon Holden.
“Boeing’s decision to appoint a new CEO who will be based in Seattle, close to the company’s economic hub, is a step in the right direction,” Holden said. Analysts at JPMorgan Chase also praised the appointment, while saying the CEO post “remains a very challenging job,” according to a note. “We believe he is highly respected in the industry, he has important operational and engineering experience, and we think he has the potential to do some of the things Boeing needs most, including restoring relationships with customers, suppliers, regulators, and legislators,” said the JPMorgan Chase note.
Ortberg is set to take office just after a two-day hearing organized by the National Transportation Safety Board in Washington on the Alaska Airlines incident. Boeing has agreed to plead guilty to a fraud charge as part of a plea deal with the US Department of Justice over the two fatal MAX crashes, according to a court filing last week. The deal must be approved by a federal judge. Shares of Boeing rose 2.0 percent on Wednesday afternoon.
© 2024 AFP
